Indiana House passes bill to protect Airbnb rentals

Marsha McCormack has been renting out a room in her home on Altam Avenue in Carmel, Ind., ever since the 100th running of the Indianapolis 500. "I just couldn't stand to watch people get scammed," she said. "I charged $69 a night."(Photo: Mykal McEldowney/IndyStar)Buy Photo

On its second try, the Indiana House passed legislation to prevent local governments from banning Airbnb and similar short-term rental services.

The House voted 53-40 Tuesday to approve House Bill 1133. Lawmakers first tried to pass the bill Feb. 6 but could not reach a constitutional majority of 51 votes to approve the legislation.

The Senate, which begins hearing House bills in March, will consider the legislation next.

Rep. Matt Lehman, R-Berne, filed the bill to prevent local communities from banning residents from renting rooms in their homes. The legislation also would prevent governments from enacting overly strict regulations, such as adding costly fire prevention codes or noise or parking restrictions, that go beyond what other homeowners face.

The legislation would come with some caveats. Owners cannot rent their rooms for 30 consecutive days or for more than 180 days a year. Owners also must purchase liability insurance to cover up to $1 million per incident for third-party claims of death, bodily injury or property damage.

The legislation became an issue in Carmel after city officials mailed letters in January to area homeowners active on Airbnb, warning they were in violation of city zoning laws and had 10 days to cease operations.

There are no provisions to allow short-term rentals in areas zoned for single-family homes within the city. People who live in apartments can continue to rent space on Airbnb and other sites, Carmel officials said, because their zoning regulations are different.

Carmel Mayor Jim Brainard said he has received complaints from residents, homeowners associations and area hotels about problems caused by short-term rentals. Residents, he said, are worried their property values and quality of life will be damaged by problems such as noise, speeding and increased traffic caused by a high turnover of people who don't care about the community. Hotels, he said, face stricter zoning regulations than homeowners and are worried they are losing business in an unlevel playing field.

There's little evidence Hamilton County hotels have been affected by short-term rentals. Whitney Riggs, spokeswoman for Visit Hamilton County, told IndyStar in January that a side-by-side analysis using Airbnb data showed no appreciable effect on local hotel occupancy.

Homeowners active on Airbnb have been opposing Carmel's decision. They say their guests have been good customers and renting rooms is an easy way to make money.

The legislation hasn't been an easy sell in the General Assembly. While Lehman is an influential Republican who ushered through similar legislation in 2015 for personal car rental services such as Uber and Lyft, the caucus has been divided on the issue. Rep. Jerry Torr, R-Carmel, tried unsuccessfully to pass several amendments that would have given local governments more control. He was among several Republicans to vote against the legislation.

Groups such as the Indiana Restaurant & Lodging Association and the Indiana Association of Cities and Towns, now called Accelerate Indiana Municipalities, also have opposed the bill. They believe local governments should maintain control of zoning decisions.

Patrick Tamm of the Indiana Restaurant & Lodging Association pointed out Airbnb is larger than most major hotel brands and should be recognized as a business, taxed and regulated properly.

Airbnb was watching closely, too.

Minutes after the House approved the legislation, Airbnb Midwest Policy Director Laura Spanjian released a statement.

"Indiana is emerging as a national model for economically empowering its people and supporting family-friendly tourism," she said. "We want to thank the state representatives who came out in support of the rights of their constituents to share their own homes. We look forward to discussing this issue further as the Indiana Senate considers home-sharing legislation."